The global economic recession has impacted export markets around the globe. For the United States and China, it has created a particularly volatile situation. Each country is the other’s second largest export market, and bilateral trade in goods reached over $400 billion in 2008.
Nonetheless, this year has seen several tensions between the two nations exacerbated by economic conditions. China’s total exports fell, causing it to be even more wary of internationalizing the RMB, which has been pegged to the dollar for years. This did not sit well with many in the US, who have claimed that this deflation is hurting the American job market as well as the global economy. China, conversely, maintains the importance of controlling the RMB for economic stability. While the US has filed numerous anti-dumping suits against Chinese goods, China has in turn cast allegations of US trade protectionism to the WTO over tire imports.
Despite these tensions, a trade war has thus far been averted, as the large trade interdependence between the two currently outweighs other disputes. In a recent meeting between the leaders of the two nations, both agreed that resolving these issues is in the best interest of all. One issue, the large deficit of over $250 billion between American and Chinese exports, could be alleviated by increased Chinese consumer spending, which is an area targeted by the Chinese stimulus plan. Top US exports to China in 2008 included machinery, agricultural products, aircraft, and plastics, while imports consisted mainly of machinery, sports equipment, furniture and bedding, and shoes.
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